Alibaba Group Holding Ltd.
increased its share buyback program to $ 25 billion from $ 15 billion, in an effort to reassure investors about the company’s prospects after a year in which the stock fell more than half.
The potential buybacks are significant compared to the Chinese e-commerce giant’s market value: As of Monday, it had a market value of about $ 270 billion, according to FactSet.
The amended buyback program will be effective for two years until March 2024, Alibaba BABA -4.35%
said Tuesday morning Hong Kong time. It said the 67% increase in firepower allocated to repurchases was “a sign of confidence in the company’s continued growth in the future.”
Chinese technology stocks in Hong Kong, China and the US – where they are listed as US custodians – have been very volatile recently due to concerns that US regulators may move to delisting Chinese companies as soon as 2024, and signs that Beijing’s prolonged regulation of repression will continue.
Alibaba’s New York Stock Exchange-listed ADRs have fallen nearly 13% so far this year – and have fallen about 57% over the past 12 months – according to FactSet. Its stock is also trading in Hong Kong, where shares rose 11% on Tuesday.
Alibaba said it repurchased about $ 9.2 billion in ADRs per year. March 18 during his previous program. That amount will count towards the new $ 25 billion in total.
Citigroup analysts said the expanded buyback plan was “probably the largest share buyback program ever in China’s Internet sector,” suggesting that Alibaba’s management viewed its stock as undervalued and attractive.
The company said separately that Weijian Shan, CEO of investment group PAG, would join the board as an independent director from March 31. Ericsson’s CEO Börje Ekholm, who has been on the board since 2015, will resign the same day, Alibaba said.
Many companies use buybacks to return cash to shareholders. The plans can help support stock prices by signaling confidence in the company’s prospects and its financial health, while earnings per share. share increases. In recent years, they have also created controversy, with critics arguing that it would be better to reinvest the money back into the business in areas such as equipment, research and higher salaries.
S&P 500 companies outlined $ 238 billion in buyback plans in the first two months of 2022, according to Goldman Sachs, and the bank has predicted that the total for the full year could increase by 12% to $ 1 trillion.
Some of the largest US technology companies have taken on even larger repurchase programs than Alibaba. Last year, for example, Google’s parent company Alphabet Inc.
and Microsoft Corp.
earmarked up to $ 50 billion and $ 60 billion for repurchase, respectively.
Write to PR Venkat at [email protected] and Quentin Webb at [email protected]
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Released in print on March 22, 2022 as “Alibaba Increases Stock Buybacks to $ 25 Billion.”